Judge Approves Sale of Newark Hospital to Prime Healthcare Services

A U.S. Bankruptcy Court Judge today signed off on the sale of Saint Michael's Medical Center in Newark to Prime Healthcare Services, moving the California-based company one step closer to ownership.

Prime Healthcare was selected as the winning bidder by the Board of Directors of Saint Michael's on Monday, but U.S. Bankruptcy Court Judge Vincent Papalia had to give his final blessing to the California-based company.


The judge's approval moves Prime Healthcare removes another obstacle in its three-year quest to own the hospital, but one last hurdle remains -- approval of the state Attorney General's Office and the state Health Department.

Prime Healthcare had entered into an agreement nearly three years ago to purchase Saint Michael’s, but the state delayed approvals. As a result, the hospital was forced to seek Chapter 11 Bankruptcy protection, which opened the doors for other bidders.

Prospect Medical Holdings, a California-based company owned by the leveraged buyout firm Leonard Green & Associates, emerged as an eleventh hour bidder. Prospect has an agreement to purchase East Orange General Hospital, which sought Chapter 11 bankruptcy protection on Wednesday.

"We are hopeful that following nearly three years of attorney general review, the state will move expeditiously and fairly so that Prime Healthcare can preserve and improve this invaluable healthcare institution for future generations and continue Saint Michael's more than 150-year legacy to the community," said Luis Leon, President of Operations for Prime Healthcare.

Prime Healthcare had widespread support in the community. Nearly 50,000 community members signed petitions in support of Prime Healthcare’s efforts to save Saint Michael’s. Additionally, the Newark City Council passed a resolution supporting the sale of the hospital to Prime Healthcare.

“Prime Healthcare looks forward to expanding its presence in New Jersey and partnering with the dedicated physicians, nurses and employees," said Prem Reddy, the president and CEO of Prime Healthcare and its foundation.

"All of us at Prime Healthcare are moved by the overwhelming support from the community, elected officials and Saint Michael’s staff, Reddy said. "We believe that exceptional healthcare should be part of every community. We are committed to maintaining Saint Michael’s high quality and compassionate care that this community has relied on for nearly 150 years.”

Prime Healthcare has committed to invest at least $50 million in capital improvements in the hospital over the next five years, to substantially hire all staff, maintain or increase current levels of charity care, and maintain existing health insurance contracts.

"For nearly three years now, Prime has remained committed to Saint Michael's Medical Center," said David A. Ricci, president and CEO, Saint Michael's. "It's been a long road and, today, we are another step closer to securing a vibrant future for our medical center, the community we serve, and our dedicated physicians and staff. We hope the state will approve the sale promptly and look forward to continuing our legacy
under Prime's leadership."

Members of the Save Saint Michael's Medical Center Coalition, comprised of elected officials, members of the clergy, current and former patients, unions who represent employees at the hospital, community leaders and residents, vowed to keep pressure on the state to ensure the sale is approved expeditiously.

“Now that the bankruptcy judge has signed off on the sale, it’s time for the state to stop playing games and approve the sale now,” said the Rev. Ronald Slaughter, the Senior Pastor of Saint James AME Church who co-chairs the coalition along with Bishop Jethro James, president of the Newark/North Jersey Committee of Black Churchmen and the Rev. Perry Simmons, pastor of Abyssinian Baptist Church.

“There is no more justification for the state to continue to delay the sale of this hospital,” Slaughter said.

Central Ward Councilwoman Gayle Chaneyfield Jenkins, who has been leading the fight to save Saint Michael’s, said she and her council colleagues will continue to keep the pressure on the state to approve the sale.

“I am calling on the state agencies to expedite their approvals of this sale,” said Chaneyfield Jenkins. “We have waited long enough – too long, in fact – for this the state to approve the sale to Prime.”

Chaneyfield called Prime decision to double its investment to $50 million a “game changer” for the city’s economy.

“This $50 million investment to upgrade and modernize Saint Michael’s is a game changer for Newark’s economy,” Chaneyfield Jenkins said. “The state needs to recognize how important Prime’s investment is to our city. Prime’s investment will create jobs in the Central Ward and modernize our hospital. We need Prime to make this investment and we need it now, not later.”

Chaneyfield Jenkins also noted that the state’s approval of Prime will mean more permanent jobs at the hospital.

“Right now, I know that Saint Michael’s has had difficulty recruiting staff as well as doctors because of all the uncertainty surrounding its future,” Chaneyfield Jenkins said. “Once this sale is approved by the state, Saint Michael’s can start hiring permanent employees, many of whom will be from Newark.”

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